Canada jobs surge: What the economists say

Canada’s economy added a higher-than-expected 59,300 jobs in November, with the bulk of hiring coming in full-time positions and in the private sector, according to Statistics Canada data released on Friday.

The unemployment rate fell 0.2 percentage points to 7.2 percent in November. All new jobs in the month were in the services-producing sector.

Here’s what the economists say:

DOUG PORTER, DEPUTY CHIEF ECONOMIST, BMO CAPITAL MARKETS:

“Just as the conventional wisdom pretty much everywhere was that the Canadian economy was practically grinding to a halt, we get handed one of the strongest job numbers of the year.”

“It’s a solid report, from head to toe. At least upon first glance, I don’t see any major warts in the data. There was a decline in construction and manufacturing jobs, but that’s quibbling, given the fact that almost all the outsized gains were in private sector and full-time jobs.”

DEREK HOLT, DOV ZIGLER, SCOTIA CAPITAL

“GOOD, NOT PERFECT CANADIAN JOBS REPORT: Now for the concerns, and there are two of them. First, hours worked were dead flat in November at 0% m/m. It’s hours worked that drive incomes, not the body count, and so while this won’t matter to markets on first pass it does matter to the consumer outlook. I’m a bit perplexed as to how we got a sizeable job gain and no growth in hours worked. The obvious statistical answers are either than offsetting the job growth must have been slightly fewer hours worked by the already employed, or this is simply just not a perfect survey and faces sampling problems. In fact, hours worked were not only flat last month, they fell 0.3% m/m in October after rising 0.4% m/m in September and falling 0.3% m/m in August. The trend is unfavourable in this measure of Canadian labour markets.

Second, job growth is coming at the expense of productivity growth which is the usual case for Canada given its moribund long run track record on this issue. That’s a continue negative for cycle earnings.

CAMILLA SUTTON, CHIEF CURRENCY STRATEGIST, SCOTIABANK:

“A very strong report. The details were also strong, in the full time and private sector.”

“All in all, juxtaposed with the strong U.S. employment, it’s positive for the Canadian dollar.”

“I suspect it continues to support a stronger Canadian dollar. We have some vague support levels, but I think what’s most important is (the U.S. dollar versus the Canadian dollar) has broken out of its multiday range to the downside, and that’s probably positive for technical players.”

MARKET REACTION

The Canadian dollar jumped to a one-month high against its U.S. counterpart after the data. The Canadian currency hit C$0.9878 to the greenback, or $1.0124. It had traded at C$0.9925, or $1.0076, just before the jobs reports were released.

Overnight index swaps, which trade based on expectations for the central bank’s key policy rate, showed that traders resumed placing small bets on a rate increase in late 2013 after the employment reports.